If a production possibilities curve (PPC) has capital on the vertical axis and consumer goods on the horizontal axis, which of the following is true?
a. Greater emphasis on the production of consumer goods today leads to greater outward shifts in the PPC, thus increasing the wealth of people in the future.
b. Greater emphasis on the production of capital today leads to greater outward shifts in the PPC, thus increasing the wealth of people in the future.
c. There is a tradeoff between emphasizing the production of capital today to benefit people today versus emphasizing the production of consumer goods today that will generate benefits in the future.
d. Greater emphasis on the production of capital today leads to future inward shifts in the PPC, thus decreasing the wealth of people in the future.
b
You might also like to view...
Automatic stabilizers dampen economic fluctuations during recessions because ________ decrease while ________ increase
A) tax revenues; tax payments B) tax payments; transfer payments C) tax payments; tax revenues D) unemployment rates; inflation rates
The income-expenditure identity is best paraphrased as
A) all spending generates income. B) all profits are used for investment spending. C) on average, consumers cannot save. D) on average, government can spend no more than what it collects in income taxes.
What are the main differences between cash transfer payments and payments in-kind? Excluding paternalistic justifications, is one generally preferable to the other? Why or why not?
What will be an ideal response?
Which of the following is a drawback of a floating exchange-rate system?
A. Adverse foreign trade shocks are especially damaging since any intervention by the central bank adds to the recession. B. Overshooting of exchange rates may cause excessive resource shifts into and out of trade-oriented industries. C. Inflation is fully transmitted from one country having a higher rate of inflation to another one having a lower rate. D. Monetary policy is ineffective in raising aggregate demand since it cannot be directed toward achieving internal balance.